The Short Sell Secret Part 4
July 23rd, 2010
So, now you have the gist of how the short sell process works in Queen Creek, Arizona. You understand that the bank is taking a lesser payment and allowing you to go about your life. However, you may still be wondering how this all happened. Why would the bank allow me to stop paying and then sell the house for less than the mortgage? This underlying factor is, in our opinion, the grand secret of the short sell.
For the first and possibly only time in your life, you have some leverage over you bank. As stated in part one, they do not want to own your property in Queen Creek, AZ. The are in the money business, not the real estate business. This is the plain and simple reason why they agree to allow the short sell. So, with the ball in your court, the bank can either sit and wait for you to mail the next mortgage payment in (which you are not going to do) or work with you to remedy the situation. Given the trials and tribulations that a foreclosure brings to all parties, the lender is inclined to work with you and approve the short sell of your home. Searching for the quickest solution to this standoff, the bank gives you the right to short sell and recoup their money from a new potential buyer. They, in effect, have stated that they don’t want to try and get your money anymore, but they will gladly take someone else’s money. This is precisely why you, as the home owner are not part of the negotiations during a short sell. Basically, you have said, “I give up my home, and I’ll take no money for the sale of it, but I’m going to live in it until you agree to an offer from one of the many potential buyers that are crawling on top of one another to get your bargain home.”
So, when the lender agrees to a purchase price, usually far below the payoff amount, they have two options. (1) they can forgive you of the remainder of the mortgage and let you walk away owing nothing, or (2) they can exercise their legal right and attempt to force you to pay the difference between the short sell price and the mortgage owed. However, the vast majority of lenders will go with option 1 because the other option, much like foreclosure, just brings more headaches, more legal fees, and more hassles. All of these things cost them money.
The short sell process gets you out of your no equity mortgage or the mortgage that you can not afford to pay with little or no effect on your credit score. This gives you the opportunity to purchase a new home that can help you build equity or simply find a home that is affordable for you.
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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.