Selling Your Home The Short Sale Way

Selling Your Home The Short Sale Way

 Short sales are the perfect way for distressed sellers to sell their homes at the moment. Many Phoenix and Scottsdale homeowners don’t even know what they are and if they qualify. Short sales have become one of the most popular ways for distressed sellers to save their homes from going to foreclosure and ruining their credit. While short sales are not the perfect solution, they are helping to get many homeowners who are underwater out of their nightmare financial situation.

 How They Work?

 A short sale must be approved by your lender before the property closes. So unlike a traditional home sale, where the buyer and seller enter into a purchase and sale contract, the short sale carries the process one step further by requiring the seller’s lender to agree to the sale. The  reason why the seller’s lender must agree is that they are agreeing to take a lesser amount owed to them by the borrower because the seller’s property is not worth as much any more.  So basically, the lender is writing off the remaining portion of the loan balance after deducting the sale proceeds and the seller’s closing costs.  The seller’s lender will also pay for the seller’s closing costs and any brokerage commissions. Many times they will pay the buyer’s closing costs as well if it is written into the sales contract. 

 How Short Sales Benefit the Seller, Buyer and Lender?    

 Benefits to the seller are that they can walk away from the mortgage without owning the lender anything as long as the lender agrees to accept the sale proceeds as the final loan payoff on the mortgage.  If you don’t negotiate this important point with the lender, you could be subject to a deficiency judgment for the shortage that the lender is taking on your loan. Fortunately, Arizona does not allow deficiency judgments like some other states do(for purchase money mortgages).

 The buyer benefits because short sales are sold at discount prices. So the buyer already gets to purchases a property with a built in equity. 

 The lender benefits to the point that they don’t have to waste time and money foreclosing. The average foreclosure takes about 4 to 6 months or longer and costs the lender about $50,000 per foreclosure.

 The Disadvantages

 The main disadvantages of short sales are that they take so long to get approved, there is no guarantee that your lender will approve the transaction and many Realtors don’t know how to handle a short sale. As a result, many buyers mad their agents tend to shy away from them.

 Who to Market Your Property to?

 Cash buyers and investors are the best buyers to market your short sale property to. Lenders like cash buyers that can close quickly. Investors are generally knowledgeable about the short sale process and tend to look for short sale opportunities more than other buyers. By marketing your properties to the right buyers, you will have a better chance of a successful short sale. Even if your lender approves the sale, it won’t do you any good if you lose your buyer.  The more knowledgeable your buyer is about the process, the better for you.    

 Short sales are an effective way for sellers to sell their homes and save them from foreclosure. Working with an experienced short sale Realtor and short sale company who can advise you on the short sale process and steps is a smart decision.

For a FREE packet of information about how to avoid a Foreclosure, go to www.NoForeclosureAZ.com

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