Short Sale Redux in 2023

Hello Hampton Roads,

Let's talk short sales. Despite big market changes since the GFC (Great Financial Crisis), believe it or not, they're still relevant today! Recently, I've had folks reach out about selling their homes short, and I closed a short sale deal myself last month. Sure, we won't see a flood of distressed properties,  it's not that kind of market! But, there are still people going through similar situations who need answers. If you're facing financial challenges or have questions, I hope this blog post helps you. 

Let's start by first defining what a short sale is-- a short sale is when a home is sold for less than what is owed on the mortgage.  The lender must approve home being sold short and if no approval is granted and the payments are not made current, then the alternative is foreclosure. Foreclosures are bad all the way around--they hurt your credit score, affect your ability to buy another home (you generally have to wait 7 years after foreclosure to get another mortgage) and if you have security clearance you could lose it!  Both foreclosures and short sales will impact your credit score but short sales allow you to rebuild your credit much faster. Typically you have to wait 7 yeas after a foreclosure to get a mortgage for another home while with a short sale it can be as little as 2 years.  In essence, when faced with the choice between a foreclosure and a short sale, go for the short sale!

Here's an overall picture of what you need to know:

Don't Wait to Ask for Help

If you find yourself in a situation where you can't make your mortgage payments contact your lender's loss mitigation department and let them know you need help.  Explore all your options including the possibility of keeping your house,  to make sure that a short sale is right for you. You can also talk to a housing counsellor about your options as well. If you find that a short sale is what works best for you, then ask the lender send you the paperwork to get started on the short sale application process.

Unveiling Financial Hardship: Your Ticket to a Fresh Start

To qualify for a short sale, demonstrating financial hardship is a crucial step. Whether it's a job loss, medical issues, or the unfortunate fallout of a divorce, your hardship is the key that unlocks the door to potential short sale approval. This is part of the application process.

Listing the Property--Cue Your Agent

It's important to work with an agent who has experience with distressed property sales. These talented professionals are your guides through the intricate process of listing and marketing your property. They'll also help you showcase your home's best features and attract potential buyers like bees to honey; and when you get a contract, they'll keep the whole thing moving along by making sure that the lender gets what they need in order to facilitate approval without undue delays. 

Typically the home is priced based on condition and sold "AS IS" with no repairs being done.  Since the home is sold short, no proceeds go to the seller but the silver lining is that the lender absorbs the costs of the sale for what would normally be a seller expense (real estate commissions, taxes, and title costs for example)

Get Under Contract and the Waiting Game

Once you get an offer for your home the short sale approval process begins! Even though you and the buyer may agree on the price, the short sale still has to be approved by your lender. This is where patience and perseverence come into play becuase the process from contract to closing could take 90 days or longer! Remember the lender doesn't have to approve the price. They can negotiate for more money if the amount doesn't meet their required net. 

One of the biggest problems is that buyers can get tired of waiting and decided to walk away especially if the lender is slow to respond and there has been little to no communication. Most folks are willing wait if they know there is progress but remember, they need a home too and won't wait if there's no news!

The Prize: Short Sale Approval Letter

While short sales are an exercise in patience, the prize is the long awaited short sale approval letter! This lets you know that the lender has approved the sale at a certain price and also let's you know the date when the closing must happen.  Closing is typically within 30 days of the date on the approval. Now it's full steam ahead to the closing table!

Short sales aren't easy, but armed with knowledge and support, you can conquer this challenge and come out on top! So, if you're one of those courageous souls going through financial hardships or have questions about short sales, don't hesitate to reach out. You can rewrite your financial story--schedule a free call at https://calendly.com/liz-schuyler

Thanks for Reading,

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