How to Do a Short Sale and Why
A lot of people today want to know how to do a short sale. With the state of the housing market and the economy, who can blame them? And the fact is that a short sale is one way to at least put off a foreclosure if not avoid one altogether.
That said, here's what you need to know about how to do a short sale.
You're going to have to be very proactive if you want to do a short sale. Your first step is to hire a Realtor who is certified and specializes in short sales to talk to your lender for you. Don't expect your lender to suggest it!'the bank just wants to squeeze you for every penny it can, not help you avoid foreclosure.
You also need to know if you live in a recourse or non-recourse state. Most states allow the lender to come after you even after you've closed on your short sale. This means your Realtor will have to get an agreement in writing from the lender stating that they won't do that.
This part of your short sale negotiations may be about to get easier, however. A new federal program called Home Affordable Foreclosures Alternatives, or HAFA, mandates that participating lenders agree to let homeowners off the mortgage hook. In exchange, HAFA provides financial incentives to lenders'and even relocation money to homeowners!
HAFA is only available through a limited number of lending institutions right now, but the program only got started in April 2010.
So how do you figure out how much your house is worth before you approach the bank about doing a short sale? Don't count on it being worth the amount of your mortgage'about a quarter of the mortgages in the U.S. are underwater right now, meaning that the owners actually owe more on the houses than they're worth.
To figure out what your house is actually worth, you're going to need to forget nostalgia and look at hard figures. The website www.realtor.com will tell you what homes like yours in your area are being listed for, and your city or county's Tax Assessor's office will have records showing what houses are actually selling for. Look for houses that are as similar to yours as possible'square footage, backyard amenities, number of bedrooms and bathrooms, etc.
And, of course, consult your Realtor'it's her or his job to look at your house the way your banker does while still working in your best interests, not your banker's.
You may be thinking that all of this sounds like a lot of work. You're right, it does take some time and effort to do a short sale correctly. But the benefits involved in a short sale make them worth the effort:
- At the very least, listing your house as a short sale puts off the time until you have to foreclose (if it doesn't sell). You can use those months to live payment-free in your house while you plan for what you're going to do next.
- If it's successful, you won't just be able to walk away from your mortgage after your short sale. You'll also walk away with a somewhat better credit score than you would have after a foreclosure.
Now, when you look at the details of how to do a short sale you might start feeling a bit overwhelmed. Just take a deep breath, and then take things slowly. Think through your choices and decide how best to protect your family and your financial future. And remember'we've been through this, and we're here to give you all the information you need!
And don't fret over trying to find a certified, professional, short sale Realtor. Just contact us, and we'll be happy to help you find one in your area.
About the Author:
Bud and Kristin Gragg have over thirty years of Real Estate sales, investing, and development experience combined, they have just survived liquidating over 24 million in underwater investment Real Estate and their incredible story needs to be heard by millions right now. Go To: http://www.TheUnderwaterMortgage.com where you can get a FREE Special Report "Underwater Mortgage Secrets: What the Banks Don't Want You to Know" Just for stopping by!! If you or anyone you know is Underwater in their home or any of their investment properties - the information on http://www.TheUnderwaterMortgage.com is an absolute must!
Bud and Kristin Gragg
The Underwater Mortgage
101 N Coloradro St Suite 2710
Chandler AZ 85225
480-497-5600