Together with the decrease in home values in the past few decades, some homeowners who need to sell in the current market find themselves trapped, as they owe more than their house is worth. In this situation, the short sale may become a feasible option.
A short sale is simply a sale where the proceeds aren’t enough to cover all the outstanding obligations connected with the sale of the home including the mortgage or mortgages, unpaid property taxes, attorney’s fees, title costs, commissions, etc.. The lender has no duty to agree to this, but many will. In most cases, a short sale is tried by sellers that are facing foreclosure or have fallen behind and no longer possess the ability to keep on making their payments.
There are a whole lot of misconceptions regarding the short sale process and the lender’s role in it, even among some Realtors. This may vary by state depending on whether it is a title theory state or lien theory state. This advice applies to Illinois, which is a lien theory state (the owner holds title and the creditor retains a lien on the property)
The seller owns the house and finally is the one who, with the assistance of their agent, accepts, rejects or proposes a counter offer once an offer is received. When the offer is accepted by Cocoa Rat Removal, it’s done so contingent on their lender agreeing to take the net proceeds of the sale as full settlement of the amounts owed. I’ve had more than one event where an agent working for a buyer asks if their offer will be submitted to the bank, before the seller has consented to accept it. It may add to the confusion if multiple supplies are received. Some think that all offers must be presented to the creditor. This isn’t accurate. All offers must be presented to the vendor, not to the creditor. The intention of the listing agent should be to obtain the best deal possible, thereby giving the transaction the best possible chance of actually closing.
What are the odds of a successful closure?
Nowadays it makes sense for banks to seriously consider accepting a short sale as, in many cases, they net more money overall versus going through the whole foreclosure process, taking the home back and promoting it as an REO (Real Estate Owned). Some states are non-judicial. Judicial foreclosures take a lot more time to complete. In Illinois, the procedure can take a year or more. There are a number of states which take upwards of 3 decades. When you consider that, in most cases, the lender is getting nothing while the procedure drags along, you begin to see their motivation to consider other choices. Add to this the deterioration to the property during that time along with the extra carrying costs, and the benefits to the lender become even more clear. The bank in this circumstance, much like the homeowner, is looking for the best way to limit their losses.
The benefits of a Brief sale:
Lenders generally don’t enable the seller to get any of the proceeds of the sale. This is fair when you consider that the entire basis of the short sale is negotiating with the lender to make them take less than what they’re owed. The only exception I’ve seen for this was years ago when, due to an error, we were out of balance by $.06 The name company actually cut a check to the vendor for six cents! As a seller in this situation, one needs to keep in mind that, if the creditor agrees to the short sale, they’re allowing the seller to avoid having a foreclosure on their record which follows them around for several years. Additionally, most short sales also allow the seller from under the debt without being chased for a lack. Both of these things should be all the inspiration you need.
Who should you call?
These transactions are not for beginners. There’s absolutely no substitute for experience when it comes to navigating through this procedure. An experienced agent and attorney are crucial. In this situation it is reasonable to ask a lot of questions. There are specialized short sale/foreclosure courses offered for agents. Some are very worthwhile but these courses alone don’t necessarily make the broker an expert. An agent referred by a seller who’s been through this process is definitely someone worth talking to.
What will it cost?
Typically, it will cost you nothing unless there is an upfront fee billed by the agent to record the home. All agents negotiate their own fees. It should cost you nothing to talk to an agent and get information. All commissions and other closing costs a vendor would normally pay will be factored in and, if the lender agrees to the brief sale, they are agreeing to the net amount of the sale so essentially, it’s the lender that is paying your closing costs. For someone facing foreclosure, a brief sale can be an excellent solution.