Posted in Foreclosure/Short sale

Pre-foreclosure Shortsale

A short sale can be an excellent solution for homeowners who must  sell and owe more on their homes than they are worth. Unfortunately, a  number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your  current needs.

Myth #1 ? The Bank Would Rather Foreclose than Bother with a Short Sale

This is one of the most common misconceptions. The reality is that banks do  not want to foreclose on your property because the foreclosure process  is incredibly costly. Banks, investors, and even the federal government  have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on  their investment through a short sale than a foreclosure.

The qualifications for a short sale include:

  1. Financial Hardship ? There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall ? “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  3. Insolvency ? The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Myth #2 ? You Must Be Behind on Your Mortgage to Negotiate a Short Sale

While this may have previously been the case, today lenders are looking for  verifiable hardship, monthly cash flow shortfall, or pending shortfall  and insolvency.

If you meet these three requirements  and believe that you soon may be unable to afford your mortgage, act  immediately. Any delay could limit your options. Do not wait until the  countdown clock to foreclosure has started and you have even less time  left.

Myth #3 ? There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This is a myth that probably hurts homeowners the most. Many do not realize  that foreclosure is a process, and that there is time to make decisions  that may result in better outcomes.

The foreclosing  party?in most cases a lender?can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as  little as a phone call from you explaining that you are trying to sell,  and almost all lenders will stall a foreclosure with a legitimate  contract. For real estate professionals who understand foreclosures and  short sales, there is time available until the foreclosure process is  complete.

Myth #4 ? Listing My Home as a Short Sale is an Embarrassment

It is understandable to have reservations about letting the world know  that you owe more on your home than it is worth. However, according to  recent estimates, more than one out of eight homeowners in the U.S. is  in the same situation. You are to be congratulated for admitting you  need help, taking action, and finding a professional who can work with  you toward a solution.

With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Myth #5 ? Short Sales are Impossible and Never Get Approved

This is a complete falsehood. Are short sales more difficult to execute?  Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.

For example, agents  with the Certified Distressed Property Expert® (CDPE) Designation  receive thousands of short sale approvals on a monthly basis. These  professionals have undergone extensive training in methods to help  homeowners in distress and process short sales. While there are no  guarantees in any transaction, more and more short sales are being  approved regularly. This is far from an impossible process.

Myth #6 ? Banks are Waiting on a Bailout and Not Accepting Short Sales

You may have heard this, but the reality is that banks (and the U.S.  government) are trying to do anything they can, within reason, to avoid  foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay  them for losses.

Today, more banks are aggressively  pursuing short sales and working with agents who understand how to  process them. Freddie Mac recently hosted a national training Webinar  for real estate agents where they expressly stated the organizational  goal of “eliminating distressed assets through modification or short  sale.”

Myth #7 ? Buyers are Not Interested in Short Sale Properties

This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who  say they only want to look at foreclosure and short sales.

For buyers, short sales and foreclosures have become synonymous with “good  deals.” More specifically, international buyers are targeting these  properties. Listing with an experienced agent who is educated in the  short sale process will provide you with a great chance of quickly  seeing a contract on your property.

In conclusion, Agents with the CDPE Designation have been trained in all aspects of  the short sale process, and know how to deal with the parties involved  in foreclosures. Finding a CDPE can explain what options you have, and  get you on the path to recovery.



Thank you for being here. I'm a Real estate agent with Keller Williams Signature.I hope that you can visit my website whether you are looking for homes for Sale or buy or just as a source for real estate information.

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