What Is A Short Sale, And Why Would A Bank Consider It?
Simply stated, a short sale occurs when the bank accepts an offer on your home that is less than what is owed on the mortgage. For example, lets say you owe $150,000 on your home in Phoenix, and the market value is $100,000. Our Phoenix short sale agent team lists the property for sale, and receives an offer of $100,000. Basically, we are “shorting” the bank $50,000. In doing so, your lender will “forgive” the debt and allow you to move on with your life.
Banks accept Phoenix short sales because they are better for their bottom line, when compared to foreclosure. A typical foreclosure will cost the bank anywhere from $15,000-$30,000 in legal fees, maintenance costs, utilities, etc. A short sale not only recoups more money for the lender/investor, but also keeps them from potentially having another home in their inventory. Remember, banks are not in the business of owning homes.
What are the benefits of a short sale versus a foreclosure?
I feel the most important benefit of a short sale is that you, as the homeowner, have control of the disposition of your largest asset (your home). A short sale gives you the opportunity to mitigate your situation, rather than simply walking away and leaving your financial future in the hands of the bank. In a short sale, your home will bring anywhere from 10-20% more money to your lender than if it were a bank-owned. This gives you the opportunity to end up with a smaller deficiency, and allows you to get out of an uncomfortable situation with the negative effects of a foreclosure on your credit report.
Is a short sale right for me? Do I qualify for a short sale?
Another common question asked of our team of Phoenix short sale agents is, “Is a short sale right for me”? This is always a difficult question to answer, as it can only be answered by you, the homeowner. We always advise our clients that until you are prepared to walk away from your home, and this is the ONLY option you are considering, it’s time to consider a short sale. Our Phoenix short sale clients usually fall into one of these categories:
-They can no longer afford to make their payments. They have already missed payments, or know that they will be missing payments in the near future, due to their financial situation (also known as experiencing a financial hardship). Typical hardships we see are divorce, lost/reduced income, sickness/death of immediate family, job transfer, etc.
-They can afford to make their payments. They have already missed payments, or know that they will be missing payments in the near future, for what we call “strategic” reasons (also know as a “strategic short sale”). Typically, these clients feel that it is in their best financial interest to “get out from under” their mortgage now, rather than waiting several years for the market to recover.
What is the short sale process, and how long does it take?
When it comes to marketing your home, our team of Phoenix short sale agents treats it just like any other “traditional” or “equity” real estate transaction. We hire a professional photographer to take pictures of your home, list it for sale in the local MLS, include it on our company website, and distribute it to 60+ real estate related websites such as Trulia, Zillow, Realtor.com, etc. Just as in a “traditional sale”, our goal is to attract as many willing and able buyers to your home, just as we would in a traditional sale, as our ultimate goal is to get “market-value” for your home.
Why won’t my lender modify my loan?
One of the most common questions I receive as a Phoenix short sale agent is, “Why won’t the bank modify my loan”? Watch this video to get the answer to this popular question.
Can my lender come after me for a deficiency? Will there be tax consequences for my short sale?
Hands down, these are the two most popular questions asked of me, and our clients often get the two questions “mixed together”. Suffice it to say that your particular situation will determine whether you have deficiency and/or tax issues with you short sale. This is why we have both a CPA and an attorney on our team, so that all of your questions can be answered.
Why should I hire Summit Home Consultants for my short sale?
Why should you hire Summit Home Consultants’ Phoenix short sale agents for your short sale?
Chances are, you have a friend, relative, or neighbor who is a real estate agent. At last count, there were 57,000 licensed real estate agents in Arizona.
One of the biggest mistakes that I see Phoenix short sale candidates make is hiring an agent that has very little or no experience with short sales. I can’t stress enough that the single most important decision you will make in the short sale process is choosing the right Phoenix short sale agent. I’ve seen countless homeowners lose their home to foreclosure because of the lack of experience from the agent they hired.
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