The Most Important Thing in a Short Sale
July 15th, 2010
The single most important thing to know is that you have the ability to sell your home in Tempe, AZ for less than you currently owe on your mortgage. After the sale you can simply walk away with no further concerns. The process is called a short sale, and with every passing day in this financial crisis of America, the short sale becomes more and more popular.
The financial situations that home owners in Tempe, Arizona are facing today create great concern. Several real estate experts estimate that more than half of all homes are currently upside down in their mortgage, meaning that the home is worth less than the mortgage. A lot of the blame can be put on poor lending practices, with ARMs and sub prime mortgages. The depreciation of home values has also been a major contributor.
With all of the turmoil, many home owners are facing foreclosure as the number of mortgages in default has skyrocketed. As a result, many people are using the short sale to avoid foreclosure and detach themselves from an upside down mortgage.
When a home owner decides to use a short sale, they must first get the approval of the bank. Because they intend to sell the home for less than the mortgage amount due, the bank can approve or deny the home owner’s request to use a short sale. Additionally, the bank can elect to refuse any offer that is made on a short sale home. However, with the rise in foreclosures, very few lenders want to put more property on their books. So, your chances of getting an accepted offer are fairly high.
If your financial circumstances dictate that you should consider a short sale, you are not alone. It is often in your best interest to search out a real estate agent that is familiar with the short sale process and can facilitate your short sale. Several steps need to be done in order to complete a short sale. You first need to get the house reappraised. Given the changing economy and the drastically different housing market when compared to the market that you purchased your home in, the value may have dropped by forty percent or more. After appraisal, place your home on the market and hope for a quick sale.
When you receive an offer, the agent that you are working with will take the offer to the bank and ask them to accept it as payment in full on your mortgage. Although the offer will most likely not cover the entire mortgage payoff, many banks will forgive the remainder of the loan to complete the sale and avoid having to foreclose on your home. However, keep in mind that the lender has full legal right to require payment of the difference.
Watch Kevin and Fred, Short Sale Specialists, on the Short Sale Power Hour. Video for Short Sale Specialists.
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Fred Weaver is a founding co-owner of Group 46:10. He has been working in the financing/real estate business for over 7 years. Fred began his real estate career by working for a large wholesale bank as a processor and rate/lock specialist for home mortgages. After 2 years in the business, Fred transferred from the banking side of home loans to the mortgage side. While on the mortgage side of financing, Fred gained experience originating mortgages and processing files for Morgan Capital of Arizona, Inc.
Kevin is a founding co-owner of Group 46:10. He began working in the real estate business in 2007 after spending 8 years working in the finance industry for companies such as Bank One, Green Tree Financial, & GE Capital.