Short Sales and Foreclosures
Anyone looking at having to sell their home through a short sale or foreclosure process is probably apprehensive about what they might have to deal with and most likely has many questions about what exactly happens. Let’s try to answer and describe what usually happens with a short sale or foreclosure.
Stay in Contact with your Lender
First of all, remember that the lender is someone you want to be in constant communication with, never avoid them and be sure to call your mortgage lender as soon as you realize you may have a problem making your payments. When a lender has not heard from someone who is in default, they typically will start foreclosure proceedings, but if you are talking with them and trying to work out a solution or letting them know if this is a temporary situation, they will try to be as helpful as they can.
If you are going to sell and are anticipating a short sale, knowing what a bank requires to process a short sale and understanding what the bank can and cannot do will really help you with both making sure it happens and gets done, but also for your piece of mind as you wait through the sale process on the way to the closing table.
Benefits of a Short Sale
Short sales are always going to be a much more desirable outcome for the homeowner when it comes to the hit to their credit rating and ability to borrow again in the future, compared to a foreclosure if they just walk away. If you help get it sold, the banks don’t have to take the time to deal with the entire foreclosure process that costs on average around $50,000.00 for the bank to foreclose and sell a home, so they are usually willing to negotiate a loss on the mortgage in order to get it sold and off the books for the bank. the cost of foreclosing and the time it takes is the reason they will negotiate down and accept this loss on the mortgage.
Short Sale Requirements
As long as everyone involved understands what the bank requires and the limitations of the typical negotiation, this can happen without too many problems. One of the things to remember is that the banks answer to the shareholders, so the loss mitigation officer who is handling the short sales has a responsibility to get as much money recovered on any default loans as possible. This means that once he is focused on your file, he will be looking to get as much for it and trying to close it as soon as possible. When an offer is presented from a buyer for a property that the bank is looking at short selling, the banks usually will not accept any contingencies in an offer from a buyer, theyalso will usually never pay for any repairs, or even consider an offer without a pre-approval from the buyers lender showing they can complete the purchase. The reason for this hard line tactic is the bank wants to see in black and white what their bottom line is when it’s all said and done, so they won’t even look at anything unless it is clear what all the costs and margins are.
Have Patience with the Process
This can create lots of frustration for a buyer and seller alike. Banks don’t always care about any dates specified in a buy sell contract. They also don’t even hold an accepted contract as exclusive, remember, the bank is looking for the best deal for their shareholders, so if a better deal from another buyer comes along at the last minute, the bank may well choose to drop one contract and sell to another buyer without anyone having a say in it. This can lead to frustration for everyone involved, but it happens.
Offers that are presented to the bank for their approval that are not packaged correctly with all the required documents will just be ignored and the loss mitigators at the banks may not even respond or tell you what they need, they expect you to have it all ready before submitting. The real estate agents that don’t understand this will create a bad situation where no one seems to know what’s happening with an offer, and they wait to hear something while valuable time ticks away.
I can Help with the Process
Having a Realtor helping you wade through the short sale process who knows what’s required when it comes to guiding everyone involved to get a positive result is invaluable. Someone who doesn’t understand what questions to ask, who doesn’t know what the bank requires in any offers that are presented, can leave your short sale stuck in paperwork red tape that delays everything until you are left with no time and forclosure becomes the outcome. Do your research and work with an experienced short sale Realtor and this difficult process can get done without it becoming the worst case outcome of a foreclosure.
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I would love to help you with your real estate investments.
Ivan Crago Realtor Missoula, Mt.
Associated with Prudential Missoula Properties
Cell 406-531-6396 Fax 406-728-2315 Office 406-728-8270 ivancrago@msn.com
Missoula, Mt Looking North from The Ranch Club Golf Course