Completing a real estate short sale is one of the most difficult transactions in all of real estate. It is important to know that the company and team you hire to complete this process for you have expertise in this area.
We found it beneficial to make sure our clients know what is going to happen throughout the process. Below are the most common questions that have been asked by our clients. If you are speaking with others and they can't answer the questions below, we recommend seeking another opinio.
What is a Short Sale?
A short sale in real estate is selling a property for less than is owned on the property. For example:
Loan Amount: $250,000
Market Value of Real Estate: $200,000
In the above example, the property is upside down a minimum of $50,000. In order to get the bank to take an offer at $250,000, a team of experts who specialize in negotiations with banks and marketing short sale properties to the real estate community are needed.
Common Questions
- How long does it take to complete a short sale?
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- Banks can take up to 60 days to give an official approval of an offer once it is received. This process can be improved by communication with the bank by your representation. Open and consistent communication is what improves the process.
- Ensuring that the required paperwork by the bank is correctly filled out increases acceptance by over 45%. Some banks will destroy an application that is even off by one item. Our team enures that your paperwork is completely filled out the first time so you have the greatest chance at acceptance.
- The bank is required to let you kow when they have filed the notice of default with the county recorders office for teh county you are in. The majority of banks do this after you have become 90 days late on your mortgage or 3 consecutive mortgage payments. From this time the earliest a sale date can be set is 90 days from that date. So you may not have to move out until days after you have missed your third payment.
- Completing a successful short sale will mean that you will not have a foreclosure reported on your credit. This will also mean that on lending applications where it asks if you have had a property foreclosed upon you will be able to answer, 'no'. This is one of the single best consequences of doing a short sale. By requesting a short sale with your lender or having a team such as Region Realty do this work for you, the number of calls you receive will be reduced by over 50%.
- If your property does not sell as a short sale, it may end up being foreclosed upon by the bank.
- It is of the utmost importance to get the bank an offer to review so that they can decide how they can best help you and to accept the offer you have received. It is for this reason that you need to have a real estate team who specializes in short sales present to the bank on your behalf.
- Each bank has their own separate set of forms that they can ask to be filled out. In fact, if you have two loans, the amount of information can be different between both banks. The types of information that can be asked for as follows:
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- Signed and dated hardship letter
- Copies of last 60 days pay stubs
- Copies of P&L statements (if you are self-employed)
- Completed financial worksheet
- Copies of last two years tax returns
- Copies of last 60 days bank statements
- Copy of investment account statements
- Copy of Listing Agreement
- Estimated net sheet (Preliminary HUD-1)
- Identification of liens on the property
- A hardship letter is a statement of how you and your family got behind on your payments. Banks are people, too, and they need to know what happened in order to help you out in the best possible manner. Events that should be included in a hardship letter are as follows:
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- Loss of Job
- Loss of overtime or income from a job
- Family issues: pending divorce, medical bills, other family issues
- Bankruptcy can delay a sale of your home at a trust sale. Your bankruptcy attorney may have additional advice for you. The short sale specialists at Region Realty are proficient at communicating with your legal representation.
- If you have declared bankruptcy, please let your short sale specialist know, and please give them your attorney's inforatmion so we may be in contact with them.
- Bankruptcy can delay the sale of your home. Please refer to your legal representative for detailed questions on bankruptcy.
- Read, review and get a copy of them to your short sale specialist. These letters contain different pieces of information and it is critical to review all of them as they may have legal consequences to them. Banks can send you letters in regards to the following:
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- Loan Modification: They can modify your loan so that the payment is more affordable for you and your family.
- Loan Forbearance: This is a temporary adjustment by the bank of the requirement to pay your mortgage. They can do this for reasons such as health, job or family issues. The amount that you do not pay is generally added to your loan balance or spread out over multiple payments.
- Unfortunately, there are many individuals out there who do not care about helping homeowners in a time o need. They in fact only care about being able to profit from your situation. Our recommendation is that you make sure to have a real estate professional look at anything prior to signing any offer from one of these individuals. If the person has a legitimate offer, they will not care who reviews the offer.
- Unfortunately, 99% of real estate professionals are not trained on how to handle a property where more is owned that the property is worth. They are not trained in negotiation and not trained on how to deal with the banks and their representatives.
- Agents need to have specialized training in order to complete this process so as to prevent further action by the bank against you. In addition, agents need to have a deep understanding of the process and be able to explain the value to the bank of working with the home owner.
- No. It would be great if they were, as it would make things easier for home owners. Any short sale specialist who has helped both buyers and sellers on short sales properties will tell you that not all short sales are created equal. Success on short sales depends on a variety of reasons:
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- Uncooperative banks
- Inadequate disclosure by the seller
- Poorly prepared buyer
- Bank delays
- Poor communication by listing agent with the bank
- Buyers back out
- Seller fails to cooperate.
- It is possible. Each bank is different and the vast majority of banks will 1099 you for the difference. This is considered debt relief by the IRS and we recommend all clients speak to their tax advisor for assistance.
- Your credit! Foreclosure is one of the biggest damages to your credit that can be done. You will have to disclose the fact that you had a foreclosure every time you try and purchase a new property in the future no matter how long it has been since you had the foreclosure.
- You will still be 1099 for the difference in the foreclosure sales price and the amount owed. In some cases, this can increase 50% by the time the property goes to foreclosure.
- The bank decides. Since the bank is losing money on the transaction, they will decide what we get paid. The most important thing in this process is you, the home owner. Our goal is that we will be able to help you out next year with a your next home purchase.
- It depends. Having two different lenders is one of the hardest short sales that can be done. It depends on how each bank has viewed the transaction and how they have both been communicated with during the entire process.
- Yes, communication is extremely important. The number one reason for foreclosure is a lack of communication. We prevent this from happening because we do the communication for you. You have a job, but this is OUR job. We get authorization to speak with the lender on your behalf, and make sure you stay informed of what is happening.
- Your Dallas, Fort Worth or Houston Short Sale Specialist at Region Realty will communicate with you a minimum of once every week throughout the process.
- We choose you. We choose to work with clients we believe that we can help. Our experience and success in short sales and negotiations allows us to identify the clients we can help. If we don't believe we can help you, we will tell you right away.
- Our real estate broker is also certified by the National Association of Realtors as a Short Sales & Foreclosure Resource. We regularly engage in continued educational classes that focus on short sales and foreclosures, to keep abreast of the latest happenings and changings as this whole short sale process evolves.
- Let us worry about that for you so you can get back to your life.
- We specialize in negotiating with the bank and making sure they understand that working with us and you is in everyone's best interest. The bank can ask for more information or seek other means to get payment if you have lied on your mortgage application and may or may not do this depending on the situation. If you believe you may have lied on your mortgage application, please tell one o four short sale specialists. Our goal is to make sure the bank works with us and you to resolve this stressful situation.
- The bank doesn't want to own your home. The foreclosure process is a very expensive process for the bank to carry out. There are legal fees, property fees, court fees, and additional staff required by the bank to handle foreclosures for a bank. Their goal is to prevent properties from going into foreclosure.
- You could, but would you go to court without a lawyer if the side that was facing you had 15 lawyers? The fact is that this is a complicated real estate transaction with a large lending organization. this process can take 100's of hours for a trained professional to complete. Most people do not have the timeto specialize in completing this kind of transaction. Our team is here to take the worry out of the transaction for you.
- We are a team of real estate brokers, agents and other real estate personnel, who specialize in helping people get out of their properties that they can no longer afford or no longer wish to own. Regardless of your situation, condition of your property, or how many you own, we can help you. Everyone runs into difficulties now and then. Our goal is to make your stressful situation go away so you can get back to your life.
In Texas, we have blessed in the fact that our state is one of the least affected by these economic hard times. While that is the case, if you are looking to purchase a home, you should consider Dallas Short Sales or Houston Short Sales...there are some good deals out there just waiting to be found.
Rodney McNabb is a Texas Short Sale Specialist. He is currently offering his services in the Greater Dallas, Fort Worth and Houston, TX areas. You may contact him for a confidential interview at (972) 839-8846.
