Avoiding Foreclosure- Short Sale Basics

We keep hearing about "short sales" all over the news on tv and in the paper. But, I know there are a lot of home-owners who have no idea what a short sale is or does or, who to talk to to get this important information.

A short sale is when a lender agrees to accept less than is owed on a property's mortgage. Not all lenders will accept a short sale. Some lenders will okay the sale, agree on the selling price but will require the seller to to make payment arrangements for the balance.

Not all homeowners will qualify for a short-sale. In the short sale transactions we have been involved in as Realtors, the sellers had a prior history of being reliable payers of their mortgage and had fallen on devastatingly hard times. On the other hand, a fellow who contacted us for help had refinanced his home several times in succession, taking money out each time and had never made a single payment. Obviously, he was not a good candidate for this foreclosure-avoiding measure.

In my opinion, there are two really good things about a short-sale:

1. It can help a seller get beyond a really troubling and traumatic period with their dignity intact and ready start a fresh chapter in their lives.
2. For a buyer, it can be an opportunity to get "more" house or to buy in their "dream" community when perhaps they wouldn't have been able to otherwise.

I also feel there are two potentially bad things about short-sales:

1. Navigating the choppy waters of a short-sale, even with an agent experienced in short-sales, can be rough. Everyone involved needs to be patient, thorough and patient some more. If your real estate agent has never worked a short sale and seems overwhelmed, ask them politely to refer you to an agent who is experienced in these transactions or find one yourself who can knowledgeably and competently guide you through the process.
2. The only thing worse than a listing agent who does not know what they're doing on a short sale is a BUYERS agent who is clueless about the process. To combat this, we use a document that both the seller and buyer have to sign. If we know an offer is coming in on a property in a short-sale situation, we immediately send the agent our Short Sale Addendum. Basically, it becomes part of the purchase agreement and when both parties and their agents have reviewed and signed it, we know we are all on the same page as far as expectations are concerned. Short sales are a waiting game. It may take 90 days to get approved by the lender. It may take 90 days to find out it is NOT approved at all. It is a frustrating process at times even when you know what to expect. Imagine how batty you would feel if you didn't!

So, if you find yourself facing the possibility of foreclosure or, you must sell and have been experiencing financial hardship, don't despair. Take action before it is too late. Call:

1. A Realtor
2. A real estate attorney
3. And an accountant to discuss tax ramifications of short-sales and foreclosure.

Do not bury your head in the sand! You do have options!

Emily & Sue Davis

Davis Real Estate Group

Keller Williams Realty

Greater Cleveland

216-299-7745